Cultural integration and foreign investments in GCC states

Cultural integration and foreign investments in GCC states

Blog Article

While the Middle East becomes a more appealing destination for FDI, understanding the investment risks is increasingly important.

Recent scientific studies on dangers linked to international direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge about the danger perceptions and management techniques of Western multinational corporations active widely in the region. For example, a study involving a few major worldwide companies in the GCC countries unveiled some fascinating findings. It contended that the risks connected with foreign investments are far more complex than simply political or exchange price risks. Cultural risks are perceived as more important than governmental, monetary, or financial risks based on survey data . Also, the research found that while aspects of Arab culture strongly influence the business environment, many foreign businesses find it difficult to adjust to local customs and routines. This difficulty in adapting is really a risk dimension that requires further investigation and a change in just how multinational corporations run in the area.

Focusing on adjusting to regional culture is necessary yet not adequate for effective integration. Integration is a loosely defined concept involving numerous things, such as appreciating local values, understanding decision-making styles beyond a limited transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, effective business connections are more than just transactional interactions. What affects employee motivation and job satisfaction differ significantly across countries. Hence, to truly integrate your business in the Middle East a couple of things are essential. Firstly, a business mind-set change in risk management beyond financial risk management tools, as experts and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Secondly, strategies that may be efficiently implemented on the ground to convert this new mindset into action.

Although governmental uncertainty generally seems to take over news coverage regarding the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more attractive for FDI. Nevertheless, the present research on what multinational corporations perceive area specific dangers is scarce and often does not have depth, an undeniable fact attorneys and risk experts like Louise Flanagan in Ras Al Khaimah may likely be familiar with. Studies on risks related to FDI in the region tend to overstate and predominantly concentrate on political dangers, such as for example government uncertainty or policy modifications which could impact investments. But recent research has started to illuminate a critical yet often overlooked factor, particularly the consequences of social factors in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many businesses and their administration teams somewhat overlook the effect of cultural differences, due primarily to deficiencies in knowledge of these cultural factors.